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Honored Advisor

TID BITS

 

 

 

China Rules on US DDG

 

 


By Mary Kennedy
DTN Cash Grains Analyst

OMAHA (DTN) -- In a further escalation of battles between the U.S. and China over trade, China's Ministry of Commerce on Tuesday increased some significant anti-dumping duties and tariffs on distillers dried grains from the U.S.

 

China duties and tariffs -- which have already had a significant impact on exports of distilled grains -- were increased Tuesday by China on distillers grains in a final ruling following a year-long trade probe. Anti-dumping duties were set at a range from 42.2% to 53.7%, while anti-subsidy tariffs will be between 11.2% and 12%.

 

The duties and tariffs apply to both distillers dried grains with and without solubles and will be in effect for five years from Thursday, according to news reports.

 

China originally launched an investigation into U.S. distillers dried grains -- with and without solubles -- a year ago after a petition was filed by the China Alcohol Drinks Association against the U.S.

 

Last September, in a preliminary ruling, China's Ministry of Commerce stated that the U.S. was dumping distillers dried grains in China, damaging the domestic industry, thus requiring them to pay a duty on distillers dried grains with and without solubles from the U.S. China had originally imposed an anti-dumping deposit of 33.8% and added an anti-subsidy tariff of 10% to 10.7%.

 

The duties and tariffs are a blow to the U.S. distilled grains market. USDA reported on Jan. 6 that U.S. exports of distillers grains were down 9% in the first 11 months of 2016 from a year ago, hurt by a 63% drop in China's total. China's absence has given other countries a chance to pick up the slack. In November, U.S. exports were actually up 9% from a year ago, led by Vietnam and Mexico.

 

Yet, there are also troubles in Vietnam for U.S. distilled grains. In mid-October, Vietnam, the third top importer of U.S. distillers dried grains with solubles, announced it would suspend imports in mid-December because of contamination from the "Ballion" variety of beetle. In mid-December, Vietnam did indeed ban imports of U.S. distillers dried grains with solubles until Vietnamese officials meet with USDA staff to address the fumigation process, the ban will stay in place. Expectations from merchandisers are that a meeting may take place by mid-February, but nothing official has been announced.

 

The U.S. Grains Council said in a statement Thursday that it was "deeply disappointed in this series of events that is a severe departure from our industry's three decades of broad, cooperative work with China's government and livestock industry and that follows a year of extensive cooperation on the part of the U.S. DDGS and ethanol industry with MOFCOM investigations."

 

"The decisions in the anti-dumping and countervailing duties investigations are not supported by the evidence and raise serious questions regarding the ministry's compliance with standard AD/CVD procedures and with China's international obligations," the Grains Council said in its statement.

 

"While painful and damaging to the U.S. DDGS industry, their biggest negative impact will ultimately be on China's feed and livestock industries, which risk losing access to an important and cost-effective feed ingredient, and on millions of Chinese households that will likely face greater food price inflation and less access to affordable, wholesome pork, poultry and dairy products."

 

The China decision comes 10 days after action by the Chinese government to increase tariffs on imported U.S. ethanol from 5% to 30%. USGC said the latest action effectively stopped a "growth market for U.S. farmers and ethanol producers. U.S. farmers also continue to wait for China's approvals of biotech corn events, which last happened in 2014."

 

Here is a link to the complete press release: http://www.grains.org/…

Informa Economics said that the uncertainty of export demand from top destinations in coming months is keeping end users from booking very far forward. "Prices are apt to soften enough for other export destinations to realize the value of distillers and increase their usage. The lack of confidence in export sales in coming months suggests that relative prices to corn and soybean meal will continue to stay below five-year average levels

 

^@@@@@@@@@

This is Obama's fault

 

Where is Vilsak ....Not a peep outta him.

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11 Replies
Highlighted
Honored Advisor

Re: TID BITS

Well, China is or was paying their own farmers $9 a bushel for corn, they`ve of course built this huge surplus because what can be done with $9 corn?  The livestock over there has been fed with imported $6 corn (by the time it gets over there).   Now all that surplus is going to crap and I wonder if they won`t crush their own ethanol out of it...so they`ll have their own DDGs.

 

But they keep buying beans, notice they don`t buy soymeal as much as the raw beans, because they want to employ their own people in crushing the meal.

 

None of this is "Trump`s fault" Obama is in office and this wasn`t the first salvo that China has fired in a trade war.  Remember Ractopamine pork and Duracade corn? 

 

I think this underscores the need of the US to look out for itself on trade, we run a $360 Billion trade deficit with that country.  And it`s even worse than that big number because them buying $9 raw soybeans from us and then sending us a finished $700 I-Phone 7 is hardly dollar for dollar trading.  There is really no need to be kissing China`s butt for fear they`ll retaliate on our ag exports, it`s quite obvious they`ll look after their self interests and we should do the same.   No good trade deal was ever struck where one party feels the need to kiss the other`s butt.

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Senior Advisor

Re: TID BITS

When you look at the #1 and #2 imports/exports to/from China, there is no really good reason for agricultural products to be pawns in any trade war.  

 

China's exports to the US amounted to $502.7 billion or 21.8% of its overall imports.

 

1. Electronic equipment: $135.9 billion

2. Machinery: $106.9 billion

3. Furniture, lighting, signs: $30.9 billion

4. Toys, games: $25.7 billion

5. Footwear: $18 billion

6. Knit or crochet clothing: $16.9 billion

7. Plastics: $15.5 billion

8. Clothing (not knit or crochet): $15.3 billion

9. Vehicles: $13.8 billion

10. Medical, technical equipment: $11.4 billion

 

America's exports to China amounted to
$116.2 billion or 7.7% of its overall exports.
 
  1. Aircraft, spacecraft: $15.4 billion
  2. Electronic equipment: $12.8 billion
  3. Machinery: $12.3 billion
  4. Oil seed: $11.1 billion
  5. Vehicles: $10.9 billion
  6. Medical, technical equipment: $7.9 billion
  7. Plastics: $4.9 billion
  8. Woodpulp: $3.4 billion
  9. Organic chemicals: $2.5 billion
10. Cereals: $2.4 billion
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Veteran Advisor

Re: TID BITS

while you may be correct.....imagine the outcry if iphone's would go up 30% due to import tax,  that $210 will cause a revolt

here......many will not understand, other than their toy went up $210......so our little twit that tweets's must be careful how he does

that, or every teenager or 20 something will protesting in the streets.

 

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Senior Contributor

Re: TID BITS

Anybody ever wonder where all these protesters find the time to protest so much.They must not have to worry to much about missing work.

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Honored Advisor

Re: TID BITS

ElCheapo, this is why I`m not overly optimistic about things getting fixed.  Trump has the right ideas but this country`s demographics are just too selfish to allow them to work, not to mention everyone`s attention deficit disorder.  If Trump doesn`t eliminate the trade deficit entirely and cut the national debt in half by Labor Day, I`m sure there will be those impatient and the howling will start, it took us 30 years to get in this mess and it will cost an entire generation...or more getting out of it, there will be an election in less than 2 years and there`s better be dramatic results by then or the Trump administration (no fault of theirs) will suffer a mid-term curse and good luck getting anything done with a bunch of blinkety-blank Democrats in.

 

But constrast what you said about snowflakes crying like babies if their I-Phone7 goes up with the Greatest Generation that sacrificed planted a victory garden, donated scrap metal around the home to the war effort, bought war bonds, followed gasoline and tire rationing...that is how we defeated hitler.  I don`t think the I-Phone snowflakes have it in them, they freaking need therapy because of the results of the November election for goodness sakes!

 

But, in all reality all China needs is for someone to stand up to them...they have to export and the US is the top banana market for all the crap they produce and they need our grain and meat, alot times we`re the only one`s in the world with any to sell and their people would get hungry and revolt without it.  We have them by the short hairs and are too dumb to know it.

 

image.pnghttp://www.bruceonpolitics.com/wp-content/uploads/2016/06/Generation-snowflake-34-650.jpg

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Senior Advisor

Re: TID BITS

It wouldn't need to be 30% on anything, that's scaremongering.  For example, a 10% import tax on only China's #1 export category to the US equals 100% of the value of all grains exported from US to China.  At a 25% import tax level, the tax is 100% of our exports to China.  Personally, I favor neither import nor export taxes, yet people need to keep these things realistic when talking about them, keep them in perspective.  

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Honored Advisor

Re: TID BITS

good info and discouraging at the same time.

 

I just keep thinking about our past........... Here is how this comes out with politicians winning elections...

 

The bears in marketing use trade issues to help drive the commodity prices down,,,, increasing end user profits.  even though it is not a big issue in real trade...

Congress provides money to production for farmers who are adversely affected by market depression.

Grain supplies grow

Farmer numbers go down because congress will target assistance to those who maybe could have been farming or those who are in trouble financially ........ all inadequitly....

 

 

If congress can finally ignore agriculture vote buying and allow producers to respond to markets with lower supply I think trade issues are a non issue long term.

 

I have never agreed with the old wives tale of "farmers produce themselves out of business"  For over 50 years that phenomenon has been created by governmental policy.  Making food dangerously cheap.

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Veteran Advisor

Re: TID BITS

well ba, you might be right.....

i watched part of ombama on 60 minutes...to be honest, it was the best one he's done...one thing that he did say was...he said he underestimated how polarized washington was, and how the biggest

issue for congress was to get elected, and how constituents were so important to those in congress.

he said there would be something introduced that everyone would agree on, but if the constituents didn't like

it, it got nowhere.......so your right ba.....how things are done and how it comes out, remembering that trump

can rule, like he thinks he can, some stuff has to be passed....if it displeasures certain people (such as apple),

doesn't have much of a chance of getting thru, no matter what party.

i think what has alot to do with this generation is, they don't know any better....in the 1940's....still rural

to a certain extent, life was more simple....today......internet, which allows more 'freedom" to communicate,

cellphones, tv....tv that has a remote control, microwaves, etc...etc....alot what they didn't have, so

you learned to do things simple....and when all else failues, or power fails, etc....they could function,

today........a power outage in NYC for 6 hours is a state of emergency.......people just go nuts.

i just happened to review the proposal for the new healthcare.........to be honest......it is a nightmare.

they want to use policy's that were for years talked down.....policys that didn't cover much, ,but looked

good and had a cheap price tag.......that is what everyone is looking at, but "you've got to check under the hood".

i looked at one of them.....no coverage for prescriptions, except in hospital, and you pay 50% of the drugs in

hospital.....yes it might look good, such as $500 ded, and $3000 out of pocket, and $2 million lifetime,

but little things like phys ther not covered chiropractor not covered....and every 6 months you have to reapply,

and if something goes wrong, bang......you don't get it, but, you can go to the guar issue, where yes we'll

take you, same as the above, but any issue with the new condition, or pre-existing issue, will not be covered,

and total coverage is cut by 50%........

 

another thing.......say we do throw an import tax on stuff....from things made in china, to bmw cars, toyota's, and

stuff comming in from mexico, say we tax at 20%.......where's the money going ????

paying down the debt or building a wall ?

 

and the possible loosers....the american people....items will be higher, since the imports will be taxed, or the american goods,

which are higher....that's it.....so people not making alot now, will have even less, since things will rise in cost.

and how will congress vote.......whichever way benefits them........

 

seems like the swamp might not get drained after all......maybe ole el cheapo should pack up the truck and move to

d.c. and start a restrant......well have nutria.....fried or baked.......and fried baloney standwich's.....both would

be fresh each day from the swamp..............

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Honored Advisor

Re: TID BITS

ElCheapo, I think 9/10ths of the whole thing on trade is to actually stand up and make noise and not be so quick to support bills that have the word "trade" in them.  For +25yrs now we`ve supported and passed every multi-lateral trade agreement that was put before us...and how is that been working out?  Our grains and meats are still either side of breakeven, too many of our factories are gone.

 

I think for a change go to China and say this is going to stop, we`re not going to run continual trade deficits with you, we want to trade.  If it means imposing tariffs to balance our countries` trade, that is what we will do, but we`re tired of getting ripped off.   Oh they`d howl about it, but if we don`t stand up for ourselves, who else will do it, Uruguay?   The thing is there has been no push back to unfair trade, the US Chamber of Commerce is for it, the Farm Bureau is for it and on and on all divided into everyone`s narrow special interests.  "If there`s a trade bill that raises corn a nickel, by golly we gotta support that!"  neverminding that a Ford plant might end up moving to Mexico and our brother inlaws will be out of a job.

 

I don`t think threats should be made without intentions of carrying out on them if need be, but for the last 3 decades it`s been US corporations that`s been pushing this stuff.  I wouldn`t be at all surprised that when it comes to brass tacks that the foreign countries would say "We wanted to have fair trade with you, but it was your own corporations  that wanted it this way...we thought it was odd, but what we shouldn`t support a lopsided agreement that US corporations wanted?". 

 

But if it would come to a tariff, that would cover the social costs of US workers losing their living wage jobs, instead of the US taxpayer subsidizing the labor exodus.

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